B2B vs B2C - Differences, Definition, Examples, Strategies (2024)

B2B, or “Business-to-Business,” means companies that provide services or products to other businesses. On the other hand, B2C, or “Business-to-Consumer,” means companies that sell directly to individual consumers.

These two models serve different types of customers and have distinct differences in terms of audience, processes, product and service types, tactics and strategies for B2B marketing and B2C marketing.

In B2B markets, no consumers are involved. However, a retailer buys on a B2B market (from another company) and sells on a B2C market (to the consumer). This means that the retailer is part of both market types.

B2B products often involve raw materials, manufactured materials, parts, and assemblies, while B2C products are mostly final goods.

This means B2B covers the whole value-added chain from raw material to a final product. The raw material, slowly transforming into the final product, becomes less and less differentiated. Each step of this transformation happens between two companies, the one selling, the other buying. The last step of this process is when a consumer sells the final product to a consumer. This transaction happens in a B2C market.

B2C markets are characterized by the individual consumer being the final user of the product or service solely for personal needs.

The sale typically occurs in retail but can also involve digital spaces such as e-commerce websites or mobile apps.

Commonly, the number of consumers is far bigger than the companies selling the goods.

It is essential to understand that the same company can operate in B2B and B2C markets. For example, a screw producer sells to a graphic card manufacturer in a B2B market. The same company, however, also sells screws to consumers using eCommerce in a B2C market.

The differences between B2B and B2C are the product type, audience, and the market. This impacts the way the business is done. It also impacts your sales and B2B and B2C marketing activities.

The 5 main key differences of B2B vs B2C are:

B2B and B2C Compared [Infographic]

Companies purchase raw materials from other businesses for use in the manufacturing process. The product is then sold to another company for the next manufacturing step. Each step adds value to the product = value-added chain.

The finished product is sold to the consumer on a B2C market.

Here is an example, from “Iron Ore to Laptop”, to outline the characteristics of the B2B market definition and customers and companies doing business in this market.

Each value-adding step marks its market. From iron ore to steel, from steel to wire, and selling laptops to a retailer. These markets are all business-to-business.

The B2B market allows two companies to interact with each other. The market can be a specific niche or a global market for exchanging goods, for example, wheat, oil, or sugar trading. Here are 6 criteria describing a Business-to-Business Market:

• Raw materials have less differentiation potential than final products.
• Price, availability, and transportation are essential. Raw materials are often traded on global exchange platforms for a worldwide stock price.
• Prices for the same good may differ for each customer, depending on the negotiation or volume of the deal.
• The number of suppliers is smaller than in B2C markets. This is especially true for seldom raw materials like rare earth materials needed for battery production.
• Global markets play an essential role in government relationships and international cooperation.
• The total B2B market is more significant than the consumer market. This is because each step of the value-added chain sums up to a larger number than the final product.

B2B customers are both customers and sellers. They buy from one company in the role of customer and sell to another business as a reseller. Different business customer types include manufacturers, wholesalers, governments, and institutions. These 4 facts give a good indication of a B2B customer:

• The decision-making process is longer and builds on trust and long-term relationships.
• The buying process happens with less emotional involvement.
• B2B customers often involve many people or groups, named the buying center. Each group member has a different role in making the best purchasing decision possible. Members include purchasing, decision-makers, users, gatekeepers, influencers, etc.
• Established business relationships tend to last for years. The focus is on maintaining the relationship based on defined and mutually accepted conditions.

I am sure you already have some examples in mind. If not, here are typical B2B examples:

• Microsoft and Salesforce sell software to other businesses.
• General Electrics creates solutions for essential energy, healthcare, and transportation infrastructure.
• ExxonMobil internationally trades oil and gas.
• Boing manufactures and sells airplanes and rockets to airlines and the government.
• Honeywell manufactures engines for the aviation industry, including the military.

A focus on emotions and personal preferences characterizes B2C markets. This requires effective branding and differentiation to stand out in a highly competitive market. With a broad target audience, B2C companies must reach more potential customers.

Transactions in B2C markets are typically shorter and focused on a one-time sale. Customer satisfaction and experience are crucial in B2C markets to build brand loyalty and reputation.

Another aspect worth mentioning is digitalization, which is more important in consumer markets, including continuing online sales growth via eCommerce platforms.

Disclaimer: The described characteristics aim to give you a general idea. There are exemptions to these aspects.

The B2C market connects companies and consumers and allows the exchange of goods for money. The market is defined by consumer needs and how a company fulfills these needs. Characteristics include:

• A B2C market often fulfills essential human needs like food, drinks, safety, transportation, and entertainment.
• Consumer markets can have multiple suppliers for the same product type. Example: how many shoe brands do you know?
• The price is the same for all customers. Discounts may be granted, but the base price is standardized.
• Consumer goods are highly differentiated. Marketers use this to position a strong brand.
• From a legal perspective, a consumer is no legal entity. Hence, business in a B2C market is done between a legal entity (the company) and a person.

Protective laws, such as consumer rights laws, fraud laws, and alike, ensure the safety of consumers.

As said, B2C customers are individual persons who consume the product or service. Still, consumers purchase goods for other consumers. The obvious example is your husband or wife buying groceries for the kids. These 5 aspects give a good impression of a customer in a B2C market:

• B2C customers buy impulsively at the point-of-sales, e.g., when shopping for groceries or other convenient goods.
• Big investments are typically treated similarly to B2B purchasing processes. Consumers include different people in the buying decision, e.g., when buying a new car or considering building a house. For example, you likely ask a friend about his opinion before purchasing a new mobile phone.
• Emotions influence the purchasing process. Markets use branding and communication to influence these emotions positively.
• Not all purchasing decisions are rational. A B2C buying process may start with jealousy over your friend’s new iPhone.
• Relationships with a company are established via the brand and brand ambassadors. This is endorsed by famous people and the promise to achieve a certain status with the help of the product.

These are only some characteristics of a B2C market and consumers. Let’s finish this chapter with examples of B2C companies doing business in B2B markets too.

• Apple sells iPhones, iPads, and computers to consumers, retailers, and institutions (e.g., schools). Business is done online and offline with the option for B2C and B2B eCommerce transactions.
• Amazon is one of the biggest eCommerce platforms in B2C and serves countless businesses. Regarding eCommerce, China-based Alibaba was founded as a B2B platform and is a B2B, B2C, and C2C (consumer-to-consumer) marketplace today.
• Nike, ADIDAS, and other major sports brands equip professional sports teams and end-consumers globally.
• Your business flight is a B2B transaction, whereas the person sitting next to you in the plane might travel for leisure in a B2C market.

Business-to-business (B2B) marketing is a specialized approach that involves developing and implementing marketing strategies, tactics, and content specifically designed to promote products or services to other businesses. This type of marketing focuses on building strong relationships and delivering value to business clients.

In contrast, business-to-consumer (B2C) marketing is centered around marketing strategies and tactics directed towards individual consumers. B2C marketing aims to directly capture consumers’ attention and interest to drive immediate sales.

While B2B and B2C marketing share similar principles, they differ in various key aspects

• Product Complexity
• Emotional Level of Communication
• Price Sensitivity and Price Range
• Decision Making
• Sales Process and Sales Cycle Time

Do you want more details? Read all the differences between B2B and B2C marketing.

B2B eCommerce

Online business sales or B2B eCommerce refers to the online marketing and sales of products between two businesses.

The primary objective is to increase customer reach and drive more revenue while reducing the cost-to-serve.

Some key advantages of online sales include automated sales processes enabling smoother transactions among businesses, suppliers, and distributors.

Further, it also reduces infrastructure and overhead costs. This, in turn, lowers the need for wholesalers or retailers, resulting in higher margins.

Additionally, the 24/7 availability increases your growth potential.

An eCommerce store can replace repetitive tasks of sales representatives. Self-explanatory products make the perfect online sale.

Challenging aspects are global payment processes. The acceptance of different payment methods and currencies is hard to realize. In addition, additional payment terms often exist for each customer. This requires powerful eCommerce systems storing customer data. You need interfaces to other systems, such as the ERP or CRM.

B2C eCommerce

Buying online is an established and continuously growing sales channel. Few companies can afford to rely on offline sales only. There are two categories of B2C companies:

• Online pure players
• Omnichannel sales

The best-known example of a pure online player in the B2C segment is amazon.com. The eCommerce giant provides a digital sales experience without a physical presence. Companies like Apple or Nike use omnichannel sales strategies, including eCommerce stores.

From a consumer perspective, buying a product online has different options. Either directly from the company (Apple Webshop) or via a reseller (e.g., Mobile Companies).

A Product Manager (PM) is a strategic role responsible for the success of a product. From its conception through to its launch and market penetration. PMs are the central point between business strategy, technology, and market success. They define the product’s direction and business objectives and create actionable plans.

In understanding the differences between B2B and B2C product management, we should first note that the core function of a PM remains the same. To deliver a product that meets the needs of the respective target group.

However, the approach between B2B and B2C differs.

B2B

B2B Product Management requires a deep understanding of the industry and the working principles of the product.

PMs in this field often do intensive research, interviews, and customer visits to gain insights into the needs. They build strong industry knowledge and create trust with both their sales teams and developers.

B2B PMs often have a technical education, a Ph.D., and a high expertise, leading to thought leadership.

B2C

As B2C products are less complex, B2C product managers focus on understanding consumer behavior and trends. They often rely on usability testing and behavioral science to make their decisions.

Marketing campaigns and branding are more important and lead to a more classic field of responsibility: price management, distribution, international sales, and marketing.

As the customer base is bigger than in B2B, B2C product managers use market research, both qualitative and quantitative, to understand their target group. Even more so for online businesses and international or global markets.

Chapter 7

B2B vs B2C in A Nutshell

FAQ

Frequently Asked Questions

Find Answers to the Most Important Questions

One Comment

1. Peol Solutions17. April 2024 at 13:37 - Reply

   Clear comparison between B2B and B2C marketing. Appreciate the concise breakdown and examples provided. Helpful resource for understanding differences.